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It is February 16, 2011 and you are auditing the Davenport Corporation's financial statements for 2010 (which will be issued in March 2011). You read in the newspaper that Travis Corporation, a major customer of Davenport, is in financial difficulty. Included in Davenport's accounts receivable is $50,000 (a material amount) owed to it by Travis. You approach Jim Davenport, president, with this information and suggest that a reduction of accounts receivable and recognition of a loss for 2010 might be appropriate. Jim replies, Why should we make an adjustment? Ted Travis, the president of Travis Corporation, is a friend of mine; he will find a way to pay us, one way or another. Furthermore, this occurred in 2011, so let's wait and see what happens; we can always make an adjustment later this year. Our 2010 income and year end working capital are not that high; our creditors and stockholders wouldn't stand for lower amounts than they already are.Required:From financial reporting and ethical perspectives, prepare a response to Jim Davenport regarding this issue.
Prepare a post-closing trial balance as of October 31 - During its first month of operation, the Rawls Repair Corporation
What transfer price is economically optimal for Gage Corporation? Show computations. Is it ethical to choose a transfer price for tax purposes that is different from the transfer price used to evaluate a business unit's performance?
question use the internet to research two publically traded united states companies and download their financial
Record the transactions on the books of the Employees Retirement Fund and prepare a Statement of Changes in Net Assets for the Employees Retirement Fund for the Year Ended June 30, 2012.
Zink Company manufactures a high-tech component that passes through two production processing departments, Molding and Assembly.
Gross increases in owner's equity that can be attributed to ongoing business activities and Equipment is purchased with a cash down payment of $60,000 and a signed note for $100,000.
How can a business earn large profits but have a small balance in Retained Earnings and how can a business lose money for many years and still have plenty cash?
Illustrate what is the company's total tax liability to both jurisdictions for each of the two alternative transfer pricing scenarios ($15 million and $20 million)?
sunhine service center received a 120-day, 6% note for $40,000, dated April 12 from a customer on account. What is the due date of the note?
Hawk Corporation redeems 75 shares of Sheldon’s stock for $75,000. Sheldon had acquired all of his shares 10 years ago at a cost of $100 per share. What are the tax consequences to Sheldon and Hawk Corporation as a result of the stock redemption?
Falcon, Inc., paid salaries of $500,000 to its employees during its first year of operations. At the end of the year, Falcon had unpaid salaries of $45,000. Calculate the salary deduction if Falcon is a cash basis taxpayer. Calculate the salary deduc..
Failure to record accrued interest on notes payable in 2012; that amount was recorded when paid in 2013. (5) Failure to record amortization of patent in 2013.
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